Republican State Chairman Jay Webber said that U.S. Sen. Bob Menendez’s (D-Hoboken) attempt to help a failing bank run in part by a major donor and a key political ally is part of a pattern of “unprecedented actions by a United States senator to benefit campaign donors.”
“To the extent that a United States senator is directly commenting and trying to affect a regulatory decision, I think it’s highly inappropriate, and Senator Menendez once again crossed the line,” said Webber.
The Wall Street Journal reported today that Menendez sent a letter to Federal Reserve Chairman Ben Bernanke urging him to approve an acquisition of First BancoAmericano, which is chaired by attorney Joseph Ginarte, who has donated $30,000 to Menendez’s political accounts since 1999, and vice-chaired by state Sen. Raymond Lesniak (D-Elizabeth). The paper reported that Ginarte and Lesniak could have seen some of their investments in the institution salvaged had a merger been approved. It was not.
To Webber, the story has a striking similarity to a previous controversy over the Food and Drug Administration’s approval of a medical device for injured knees. After lobbying that the agency described as “intense and extreme” by Menendez, U.S. Sen. Frank Lautenberg (D-Cliffside Park), Reps. Frank Pallone (D-Long Branch) and Steve Rothman (D-Englewood) – all of whom had recently been given significant contributions by the New Jersey-based manufacturer, ReGen Thearpeutics – FDA higher-ups approved the device for sale, despite ruling in previous years that it was unsafe.
“Nobody would object if he simply wrote a letter touting the merits of the position of his constituents… Both with the FDA and the Fed, he crossed the line from advocating for constituents to trying to affect the outcome of the process,” said Webber. “I’m sure that whoever runs against Senator Menendez in 2012 will not let voters forget about the various pings on his record in this record. There’s a pattern that the senator engaged in and people will be reminded of it.”
After the bank’s failure, the Federal Deposit Insurance Corporation (FDIC) – which had to spent $15 million when the Fed allowed the bank to fail — wound up auctioning it off to Crown Bank, which is owned by JJR Holding Company, Inc. — the same company that had originally wanted to acquire it.
The request for Menendez’s help was made by a consulting firm that was working on the merger.
“By criticizing the fight to save a local, independent bank, the chairman of the state Republican Party is applauding the fact that bank branches are closing and lending is drying up in New Jersey communities where families and small business owners are starved for financial services,” said Menendez spokesman Afshin Mohamadi in a written statement. “He’s applauding the fact that the federal government decided it was better for the FDIC to spend $15 million and then sell at a reduced rate to the same folks who wanted to buy the bank at full price in the first place. The manner in which this bank was allowed to fail was a jobs killer for the community at a time when job creation is essential, and he’s applauding that. What’s inappropriate here is that he is throwing families and small business owners under the bus. That’s going pretty low to score political points.”
Mohamadi said that Menendez’s office cannot ethically check campaign contributions from constituents or New Jersey companies that request help, and noted – as the article pointed out – that the acquisition had already been approved by the state.
Lesniak, who at one point both chaired the bank and was its largest shareholder, said that he never contacted Menendez about the bank and that the Senator did nothing improper by advocating on behalf of a small financial institution that serves mostly minority New Jersey residents.
“It was a Hispanic bank that was too small, unfortunately, to be helped by the federal government,” he said.
Lesniak declined to say how much he had invested in the bank, and how much of that could have been saved by a merger.
“Was [Menendez] asking that they do anything improper? And if the answer is no, there are no further questions,” he said.
Monmouth University pollster Patrick Murray said the story could have political ramifications for Menendez, but only if an investigation is opened up by a law enforcement agency or the Senate Ethics Committee.
“If this is as far as the story goes and Menendez’s opponent raises it in 2012, Menendez will claim he did nothing out of the ordinary and will fire back with a charge of his own,” he said. “Then, it’ll just get lost among the typical mud fest that New Jersey campaigns have become.”